Right Thinking From The Left Coast
Never trust a computer you can't throw out a window - Steve Wozniak

Sunday, January 16, 2011

A Warning Shot From Moody’s

Consider us warned:

With attention focused on sovereign-debt worries in Europe, two major credit-rating firms reminded investors again that the U.S. has debt problems of its own.

Investors bought Treasury debt nonetheless, ignoring the comments, which echoed prior statements by the companies and may still be months or years away from having any practical meaning.

“The warning on the U.S. rating is well-founded,” said Brian Yelvington, chief fixed-income strategist at Knight Capital. “However, it will probably fall on deaf ears until the peripheral Europe story plays out.”

Moody’s Investors Service said in a report on Thursday that the U.S. will need to reverse the expansion of its debt if it hopes to keep its “Aaa” rating.

As Bainbridge points out, the markets are still hot for US treasuries and the opinion of the market is more telling that the opinions of the guys who couldn’t see the housing bubble coming.  As the article notes, as bad as US debt is, European debt is worse.  Not so much as a proportion but because several countries in the EU are on the verge of pulling a Greece (my money is on Italy).

Still, this is a warning shot for both the rampaging debt and the debt ceiling.  There are report that the Democrats wants to play chicken on the latter—vote en masse against raising it to force the Republicans to own up to ... well, to own up to the big spending spree of the last two Congresses, I guess.

Posted by Hal_10000 on 01/16/11 at 11:55 PM in Politics   Law, & Economics  • (0) TrackbacksPermalink
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